Hospitals on defensive over Medicaid

Published 5:00 am Thursday, June 25, 2009

Area hospital administrators are on the defensive over Gov.Haley Barbour’s insistence on a maximum-level hospital tax to payMedicaid’s budget deficit, calling the formula unfair and claimingit will cost their institutions hundreds of thousands of dollarsannually.

Hospital chiefs from Brookhaven, Meadville and Monticello agreethat paying their share of the governor’s desired $90 millionhospital tax would cut deep into their bottom lines and in someinstances could cause staff and service reductions. They alsopointed out that taxing hospitals to pay for a state social serviceis unfair, saying the state should fund the program and not privatebusinesses.

“What governor wants to do is balance the state budget on thebacks of hospitals who are taking care of the poor people inMississippi,” said Alvin Hoover, chief executive officer ofBrookhaven’s King’s Daughters Medical Center. “Whose responsibilityis it to pay for Medicaid? Not hospitals. We’re the service -people are supposed to pay hospitals to provide health care.”

House and Senate budget negotiators Sunday night announced theyhad finally reached an agreement on the state’s approximately $5billion budget for fiscal year 2010, but Barbour announced Mondayhe would not call a special session to bring the spending plan to avote in the Legislature. With the regular session over, lawmakersare dependent on the governor to recall them to Jackson toestablish a budget before the new state fiscal year starts July 1 -one week away.

Barbour said he would not consider negotiators’ proposal becauseit does not balance the Medicaid budget and gives the program a”blank check” with protections against cuts in the future.Negotiators agreed on a $60 million hospital tax; the governor hasdrawn the line at $90 million and has said cuts to all stateagencies may be necessary in the future.

But Hoover said hospitals already pay $150 million into Medicaid- which provides health care to more than 20 percent of Mississippiresidents – in order to receive reimbursements. He said thegovernor’s proposal would increase hospitals’ Medicaid burden to$240 million, and the new contribution would not result in matchingmoney for hospitals and would simply be a tax.

According to a study done by the Mississippi HospitalAssociation – which helped craft an original hospital tax proposalof $45 million – a $90 million tax would cost local hospitalsdearly.

MHA research indicates a $90 million tax on hospitals wouldresult in losses of $649,097 for KDMC, $72,079 for Franklin CountyMemorial Hospital in Meadville and $82,424 for Lawrence CountyHospital in Monticello.

The same document lists losses as a result of the tax combinedwith further budget cuts – which would decrease hospitals’ Medicaidreimbursements – at approximately $6.5 million for KDMC, $720,000for FCMH and $824,000 for LCH.

Hoover said such losses would be difficult for KDMC to handle.The losses would be even tougher for FCMH, which is only nowemerging from years of financial struggles, said hospital CEO andMeadville Mayor Sonny Dickey.

“It’s not going to be easy,” he said. “I really don’t have extra(money) in my budget to pay for it. If they go to $90 million, I’mgoing to be losing money.”

Dickey said a $90 million hospital tax and cuts to Medicaidwould cause several smaller health care facilities to close. FCMH’sinpatient population is 90 percent Medicare and Medicaid, he said,and the hospital and other rural operations like it depend onMedicaid reimbursements to survive.

LCH Administrator Semmes Ross said his hospital would alsosustain financial injury from a $90 million hospital tax, thoughthe impact would be lessened because it falls under theguardianship of the much-larger Southwest Mississippi MedicalCenter in McComb. Still, he also predicted the possibility ofreduced medical services and staff.

What’s worse for LCH, Ross said, is that the hospital doesn’ttreat many Medicaid patients – its patient population is mostlyMedicare. If the tax is enacted, LCH would help shoulder the burdenand receive few of the benefits.

“They don’t ask the grocery stores to help pay for the foodstamp program, do they?” Ross said. “(Medicaid) is not just ahospital problem; it’s the state of Mississippi’s problem. To fundit on the back of one entity is wrong. Nobody minds doing part ofit, but to do all of it is not fair.”

The disagreement between legislators and the governor overMedicaid is basically the only argument holding up the fiscal year2010 budget, but the fight could have far deeper ramifications thanburdening three local hospitals.

With only one week until the start of fiscal year 2010 and nobudget agreed upon, some state officials are predicting stateservices will cease operating next Wednesday. Medicaid has alreadyinformed health care providers around the state no furtherreimbursements will be issued until after July 1 because of theprogram’s deficit.

But Medicaid may not exist after July 1. The program is set toexpire this year, and legislators have not yet reauthorized it. MHAPresident and CEO Sam Cameron said in an e-mail Wednesday that”pure chaos will result” from Medicaid’s expiration.

Local lawmakers, however, believe the potential crisis will beaverted. They pointed out Medicaid is the only one of severalbudget issues causing the disagreement, and House and Senate budgetnegotiators are continuing to refine their proposal. House leadersare also all but demanding a special session as soon aspossible.

District 53 Rep. Bobby Moak, D-Bogue Chitto, said any Medicaidproposal accepted could be fine-tuned in the 2010 regular session,which is only six months away.

“We deal with deficit issues all the time,” he said.

Barbour, however, is unlikely to agree to a “fix later”proposal. In an e-mail to Speaker of the House Billy McCoy onMonday, the governor said legislators have yet to come to anagreement to balance the fiscal year 2009 budget.

Some legislators will vote against a hospital tax no matter whatagreement is reached.

“I’ve never voted for a tax increase (on hospitals) and don’tplan to vote on this one,” said District 91 Rep. Bob Evans,D-Monticello. “I want to keep our little rural hospitals open, andI don’t think you keep them open by adding more taxes.”

Evans said money should be taken from state reserves like therainy day fund or the tobacco trust fund to cover Medicaid’sdeficit. Barbour, however, has often and successfully opposed sucha plan, constantly calling for a “permanent and sustainable”solution.

With only one week left in which to craft a budget, the state isbasically where it started in January.

“We’ve got nothing,” said District 92 Rep. Becky Currie,R-Brookhaven. “The negotiators are going back to the drawingboard.”